EDITORIAL – What tiny Sark can teach the Cayman Islands

Mention the Channel Islands to many in the Cayman Islands – especially those in the financial community – and the islands of Jersey and Guernsey will come to mind.

But for our purposes today, we want to focus on a lesser known Channel Island, the bucolic community of Sark, home to fewer than 500 people – but not to a single streetlight or automobile. (A few horse-drawn carriages make up Sark’s “mass transportation” system.)

Now Sark has found its way into the worldwide media (including the Compass!) because as of midnight Friday, unless God or man intervenes, Sark is about to go dark. Its electric company is about to pull the proverbial plug because government regulators have “regulated” it out of business.

The regulator ordered the electricity provider, Sark Electricity Limited, to lower its rates. The provider said the order would result in the company losing 20,000 pounds (approximately CI$21,300) per month, which would put it into bankruptcy.

The regulator refused to budge, and the power supplier sent out a notice to every household in Sark, apologizing for the crisis and advising the occupants, well, to gather up their most valued possessions – and evacuate their homeland.

The problem, you see (but the regulator couldn’t or wouldn’t), actually went beyond electricity. The pumping system that enables the delivery of potable water requires electrical power, so the islands will have neither power nor water.

(A last-minute meeting between government and the family-owned power company failed to reach a deal.)

Now back to Cayman and our own version of regulator chaos.

Since its inception in early 2017, the Cayman Islands’ Utility Regulation and Competition Office, more commonly known as OfReg, has been defined by erratic policymaking, general ineptitude, threats of violence and the incomprehensible squandering of over-budget dollars.

Revisit this silliness: Shortly after its establishment OfReg issued an advisory warning that anyone providing an internet or communications technology service for a fee must be licensed as an internet service provider. This potentially could have included hotels or coffee shops which offer WiFi to their customers.

Premier Alden McLaughlin swiftly stepped in to stop that nonsense by publicly denying it government support. By then, OfReg was already turning its attention from coffee shops to telecoms – vowing to force those entities to pay for a fiber optic network that would bring high-speed internet service to the eastern districts.

The Compass strongly opposed OfReg’s stated intention as a landmark intrusion into the private sector. During a consultation process, the country’s telecommunications companies condemned the idea for, among other things, its sheer impracticality. Now, OfReg appears to be retreating from that particular item on its agenda.

But clearly the broader lesson for OfReg has not sunk in. Recently, the regulator rejected Cayman Water’s latest proposal to extend its licensing deal (which expired more than 10 months ago) to provide water to homes and businesses in the Seven Mile Beach and West Bay areas. Considering that the private water company can turn off the taps and spigots of the country’s most-densely developed corridor (presumably with the twist of a valve), OfReg’s negotiation strategy can be described as reckless and, at the end of the day, a big bluff. (Of course, that is what the residents of Sark no doubt thought, too.)

We know that external displays of dysfunction derive from internal disorder. In OfReg’s case, this was exhibited most unprofessionally during a meeting of the regulator’s Board of Directors, where Board Chairman Linford Pierson threatened physical violence against Deputy Chairman Ronnie Dunn, after Mr. Dunn claimed that Mr. Pierson may have broken the Anti-Corruption Law by attempting to secure a commitment from board members to support Mr. Pierson’s appointment as acting CEO of OfReg – the very entity he was appointed to oversee.

Premier McLaughlin has attributed OfReg’s woes to “teething challenges” – but it is quite clear that if OfReg were ever allowed to develop real teeth, they might well be fangs capable of sucking the lifeblood out of some of Cayman’s most vital industries and utilities.

The sitting government must no longer sit on its proverbial you-know-what as if it were merely a bystander watching the regulatory mess it created. Cabinet must step in and fix it – now.